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Chilean banking majors book higher profit in Q2 on solid operating income

Chile's three largest banks saw their combined profit improve year over year in the second quarter of 2019, as growth in operating income offset an upturn in expenses.

Banco de Credito e Inversiones SA, Banco Santander Chile and Banco de Chile posted aggregate net income of about 475.69 billion Chilean pesos for the three-month period, rising 14.51% from 415.42 billion pesos in the prior-year quarter, according to data compiled by S&P Global Market Intelligence.

Banco de Chile booked the highest net income among the three banks, advancing 18.19% year over year to 192.13 billion pesos. BCI's and Santander Chile's profits also rose, to 112.34 billion pesos and 171.23 billion pesos, respectively.

The banks' net interest income grew 11.76% annually to reach 1.066 trillion pesos, while net fees and commissions rose 11.30% to 265.97 billion pesos. In turn, operating income advanced 13.01% to about 1.502 trillion pesos.

On the other hand, the combined expenses of the banks increased 12.32% from a year ago, coming to 1.026 trillion pesos. Operating expenses expanded 11.19% yearly to 666.00 billion pesos, while asset write-downs climbed 20.15% to 240.37 billion pesos.

Of the three, only BCI recorded a lower return on average equity, dropping to 12.64% from 13.98% a year earlier. Meanwhile, Santander Chile was the only bank with a lower net interest margin compared to a year ago, sliding to 3.82% from 3.99%.

Banco de Chile saw its core Tier 1 capital ratio fall to 11.02% from 11.16% in the year-ago period, while those of the other two improved.

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As of Aug. 5, US$1 was equivalent to 721.55 Chilean pesos.